GM's Mickey Mouse Plan to Boost Car Sales: Be More Like Disney
It has long been clear that General Motors (GM) CEO Dan Akerson and his lieutenants would have to get creative to win back customers.
Decades of shoddy cars had driven away many longtime GM loyalists. And just as GM's cars were finally starting to get better, GM's 2009 bankruptcy -- and its controversial government bailout -- turned even more buyers away.
But now GM's North American chief, Mark Reuss, has a plan to make people happy to return to its showrooms. And believe it or not, that plan involves getting a lot of help from -- of all places -- Walt Disney (DIS).
Recapturing the Magic
Reuss wants Chevrolet customers to love the company and the Chevy brand in the same way that loyal Disney fans return again and again to Disney World.
To do that, Reuss has put more than 20,000 GM employees and dealers through special customer service training run by Disney, according to a Bloomberg report.
Reuss has pushed GM's dealers to make their showrooms more attractive and welcoming, and told dealers and employees to think of their customers as "guests" -- the same term Disney uses for the people who visit its amusement parks.
Dealers have been skeptical of the training, but many have found it helpful. A number of dealers have already implemented changes suggested by the Disney trainers, some of which are tiny details like making sure every staff members wears a nametag.
It sounds crazy for GM to worry about nametags while it loses market share around the world to ruthless competitors like Toyota (TM) and Volkswagen (VLKAY.PK). It raises the question: Is sending its dealers to the Mouse House really the best way to reward taxpayers for GM's bailout?
The Method Behind the Mouse-ness
Reuss isn't a dumb guy -- far from it. More than most people at GM, he knows deep down that his company, like any automaker, will live and die by the quality of its products.
This is important. An automaker that makes good cars and trucks can sell them without big discounts. It makes more money, and has more money to spend on developing the next generation of products, to ensure that those cars and trucks are good, too. That's the formula for success in the auto business. Just ask Ford (F), which has followed it to big profits in the last few years -- without any help from Uncle Sam or Disney.
Reuss knows that GM needs to follow in Ford's footsteps. In fact, that's already happening with a slew of new cars and trucks on the way (13 new Chevys are due in 2013 alone).
Those new products should go a long way toward giving GM what it needs to compete -- not just with Ford, but with the import brands that have been eating its lunch for years. But great new cars don't help if nobody shows up to test-drive them.
That's where the Disney thing comes in.
GM's customer retention -- the rate at which its current customers come back to buy new GM products -- is around 52%. That's about average for an automaker. But Toyota's is 58%. Clearly there's room for GM to improve.
Reuss figures that every percentage point of improvement is worth $700 million in revenue to GM. Acquiring new customers is the job of GM's marketing department. But getting them to come back, over and over -- that's Disney's specialty.
GM would like it to be their specialty, too. And that's why they've opened their doors and minds to the experts from the Happiest Place on Earth.
At the time of publication, Motley Fool contributor John Rosevear owned shares of General Motors and Ford. Follow him on Twitter at @jrosevear. The Motley Fool owns shares of Ford. Motley Fool newsletter services recommend Ford, General Motors, and Walt Disney.